From the Horses Mouth: Exploring IRS Guidance for Fiscal/Employer - - PowerPoint PPT Presentation
From the Horses Mouth: Exploring IRS Guidance for Fiscal/Employer Agents Kate Murray, Director of Policy Agenda for Today: Lets Hit The Books Review foundational tax guidance for Fiscal/Employer Agents Revenue Procedure 2013-
Kate Murray, Director of Policy
guidance for Fiscal/Employer Agents
Revenue Procedure 2013- 39
Publication 15/Household Employer’s Tax Guide
Revenue Manual
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as the role of the F/EA evolved over time
that was passed on to agents all over the country
rely less on oral tradition
IRS guidance for use in their own operations and when working with IRS staff
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Fiscal/Employer Agents operating under Section 3504 of the Internal Revenue Code
Consolidates and updates decades of previous IRS guidance applicable to Fiscal/Employer Agents
“both the agent and employer are liable for the employment taxes and penalties associated with the employer’s employment tax
a Vendor Fiscal/Employer Agent
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Identification Number (EIN)
reasons unrelated to self-direction can continue to use that EIN for that purpose while self-directing
Must indicate on Form 2678 that the appointment of agent is for SOME employees
State taxes must be considered
the letter of approval mailed by the IRS
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to as an “aggregate return” in Rev. Proc. 2013-39
aggregate return—i.e., Schedule R for Form 941 and Schedule R for Form 940
separately for purposes of dollar threshold or wage base applicable in determining employment tax liability—NOT per agent
Important for FICA threshold and FUTA taxable wage base calculations
The liabilities remain with the old agent even after agent authorization is revoked
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are exempt from FICA and FUTA
The son or daughter (the employer) has a child or stepchild (including an adopted child) living in the home
The son or daughter (the employer) is a widow or widower, divorced and not remarried, or living with a spouse who, because of a mental or physical condition, can't care for the child or stepchild for at least 4 continuous weeks in the calendar quarter in which the service is performed
The child or stepchild is either under age 18 or requires the personal care
the service is performed due to a mental or physical condition
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Security and Medicare
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Employees who do not meet the FICA wage threshold ($2,100 in 2019) must receive a refund of their share of FICA taxes paid
FICA refunding for employees who did not meet the FICA wage threshold is not optional!
budget or to the state
Check with your program administrator for guidance
household employee once an employer pays total cash wages of $1,000 or more in any calendar quarter of 2018 or 2019 to household employees
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how to enforce the nation’s tax code
accumulated a sizable body of procedures related to Fiscal/Employer Agents and participant-employers in self- direction
exceptionally useful when working with IRS staff who may be unfamiliar with F/EA rules and requirements
available for members
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“That’s gold, Jerry! Gold!”
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government programs under which they receive health care and personal attendant care that usually constitute domestic services for employment tax purposes. They are generally the employer of the home care service providers for employment tax purposes. A HCSR may designate an agent under IRC 3504, Acts to Be Performed by Agents, to perform acts required of them as an employer. Generally, IRC 3504 agents for HCSRs file aggregate Forms 941, attaching Schedule R (Form 941), to report FICA taxes and withheld income taxes, and file aggregate Forms 940, attaching Schedule R (Form 940), to report FUTA taxes. See Rev. Proc. 2013-39, 2013-52 I.R.B. 830 for special rules that apply to state and local government agencies that act as agent for HCSRs.” (4.23.10.10.5, #6)
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requests must be handled with sensitivity. Many times, the SS-4 is submitted by the fiscal agent and they may list him/herself as a third party designee (TPD). The fiscal agent for a HCSR must have an EIN for the HCSR before they can file Form 2678, Employer/Payer Appointment of Agent, and begin paying employment and FUTA taxes and filing those returns on behalf of the HCSR.” (21.7.13.5.15, #2)
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Recipients (HCSRs) and will not be treated as regular household
primary name line behind a closing bracket.” (3.13.2.16.3, #6)
existing business, but it is not allowable to get a new EIN as an HCSR if registering as a business entity
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As a sole proprietor with no filing requirements.
Add "HCSR" to the primary name line.
Example: JOHN]DOE]HCSR
Caution: Do not treat them as you would normally treat household employers (do not input Return ID Code ZZ on CC ESIGN), even if box 13 is checked indicating they have household employees. The agent will file employment and FUTA tax returns on behalf of these HCSRs.
Do not update the primary name line.
Do update Integrated Data Retrieval System using the following information from Form SS-4:
Notate the existing EIN on Form SS-4 followed by PA (previously assigned)
Prepare 0147C letter and send to new mailing address.” (21.7.13.5.15, #4-5)
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Filing Requirement Codes indicated in Part 2, Item 5 of Form 2678 from the employer/payer's EIN. If the boxes in Part 2, Item 5 are marked for some employees, do not delete the Filing Requirement Codes from the Employer/Payer's EIN.
delete the 940 FRC from the Employer/Payer's EIN and ensure "HCSR" is added to the Employer/Payer's primary nameline.”
(3.13.2.16.3,#2)
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and during research you find an EIN has already been assigned for the taxpayer, do not disclose this to the caller. Advise the caller you have all of the information you need and will respond to the taxpayer directly. Third Party Designee authority applies to newly assigned EINs only.” (21.7.13.3.5.4, #4)
participant’s SSN
In reality, this may not be enough
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already has an EIN], a previously established sole proprietorship EIN is located:
Do not update the primary name line.
Do update IDRS using the following information from Form SS-4:
Notate the existing EIN on Form SS-4 followed by PA (previously assigned)
Prepare 0147C letter and send to new mailing address (21.7.13.5.15, #4)
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dated September 23, 2011. The memorandum contains the following information: Preparer/taxpayer signature stamps will not be permitted when signing other documents such as S-elections, applications for change in accounting method, powers-of-attorney, consent forms, revenue agent reports, and other case inquiry/resolution related documents requiring signature.” (3.13.2.16, #14)
Form 2678 is included as a consent form
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request a second EIN to be used exclusively for acting on behalf of
second EIN to file employment taxes on behalf of HCSRs. The Section 3504 Agent should file aggregate employment tax returns that include taxes for all of their own employees and for the employees of the HCSRs. However, if requested, non-governmental agents may obtain a second EIN to file employment taxes on behalf
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requirements established
assigned
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